Many people’s first encounter with the Covid-19 outbreak was in the supermarket, but empty shelves expose supply chain problems that run much deeper than the current crisis.

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Like most people, my first direct encounter with the Covid-19 crisis was in a supermarket. One weekday in the first half of March, I went to pick up a few things at my local Lidl in Osdorp, Amsterdam. Nothing out of the ordinary, but as it happened, we were low on toilet roll. When I went to get some, I saw several people picking up the 24 pack they had on offer. One person was carrying two of these jumbo packs. I’m embarrassed to say that the sight of literally hundreds of toilet rolls leaving the store in a matter of minutes, coupled with the stories of panic-buying I’d seen and heard about in the UK and the US, moved me to pick up a pack myself.

A few days later, on Friday 12th March, the first lockdown measures were introduced by the Dutch government. Shelves were practically empty in many supermarkets by the following morning. Since then, most stocks have been replenished (flour being one of the notable exceptions, apparently even the suppliers of the supermarkets ran out of it), but subsequent trips have remained charged with a new significance that’s somewhat hard to deal with.

Conspicuous abundance

I’m no stranger to fraught supermarket encounters. To be honest, I’ve always found the supermarket a pretty anxiety-inducing space. Maybe it’s the lack of light, or the fact that too much choice stresses me out. I’ve never felt comfortable around such conspicuous abundance. But the feeling that everyone else around me is also equally on edge doesn’t help matters.

For most people in the West, there’s clearly something quite disturbing about empty shelves. Until recently, most of us had come to see them as a thing of the past, or perhaps associated the image with shops in the Soviet Union, and other socialist countries of the past and present. Which is to say, we think of the phenomenon as a product of systems beset by scarcity. It’s this association that has undoubtedly fuelled a number of laughable attempts to displace our own system’s recent failings, by casting it as a momentary taste of what life would be like under a socialist system. But the sudden surge in demand caused by the Covid-19 outbreak is not a momentary taste of life under socialism. Nor is it a sign of the greed of what is likely only a small number of hoarders. Rather, it’s an emphatic expression of the fragility of our entire economic model.

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The problem with distribution

In an article on this subject for Novara Media, Craig Gent quotes a recent statement made by the CEO of British supermarket chain Waitrose made on BBC Newsnight. “The supply of goods, the manufacture of food, is in good shape. There isn’t a problem there; there is enough food. […] The challenge that the supermarkets are facing at the moment is getting that food into their distribution centres and then having enough space, and having enough lorries and drivers to get it to the shops, and then being able to keep it on the shelves.”

This is a pretty accurate explanation of the essential requirements for our system’s “just-in-time” supply chains to function properly. It’s not about the availability of food, but its distribution. Just-in-time supply chains are principally concerned with maximising efficiency (and profit) by minimising waste: of space (e.g. goods sitting in costly storage facilities); and time (e.g. workers spending too long delivering or processing those goods, or demanding too high a price for their labour). This goal, to trim all the excess fat from a supply chain, to make it as “lean” as possible, works very well when everything else in the system is ticking along as normal. But it leaves very little room for sudden unexpected shifts in consumption patterns: like when a large section of the population are suddenly compelled to stay home and stock up on supplies while the (normally critically undervalued but now all of a sudden “essential”) workers tasked with keeping the supply chains moving are reluctant to come out to work for fear of infection.

Historical Aberration

Another source of fragility is the thin spread of these supply across the entire globe. With containerisation and logistics innovations having dramatically reduced the costs associated with transporting goods from one part of the world to another, the materials and work contained within a single product can come from dozens of countries in different parts of the world before it reaches the consumer. Again, this is all well and good when the global economy is functioning as normal, but it seems critically short-sighted now that certain countries have been forced to reduce their economic activity drastically.

We’re only a few weeks into the current crisis, so we’ve probably only just begun to see serious changes in the availability of certain consumer goods (namely cleaning and medical supplies). But even this quick recap already makes me think that the supermarket as we know it is an historical aberration, fuelled by an astonishingly short-sighted and precarious global economic arrangement.

As the story of a small group of Mexican heroin traffickers demonstrates, just-in-time supply chain methods revolutionised all areas of the global economy, including the drug trade.

In the early 1990s, the US drug trade was turned on its head by an unlikely group of drug dealers from Xalisco, a town in the small Mexican state of Nayarit. At the very moment when just-in-time supply chains were revolutionising global patterns of consumption, these drug dealers inadvertently innovated a system of drug enterprise which adopted many of the same essential methods.

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As journalist Sam Quinones details in his remarkable book Dreamland: The True Tale of America’s Opiate Epidemic, the heroin dealers from Xalisco first came to the US in the early 1980s. Following the lead of previous Mexican drug traffickers, they brought with them a form of “black tar” free-base heroin which – despite being less pure than the traditional white powder heroin that came to the US from Asia by way of New York – was much cheaper and more accessible for the American market. The Xalisco dealers initially established themselves in the San Fernando Valley in California, joining other migrants from their city who were working in legitimate industries. Here, they found themselves far enough away from the notorious Sinaloa cartel to be able to deal the black tar heroin without serious threat of gang violence.

Remaining Inconspicuous

This desire to avoid violence (which they rightly saw as bad for business) also guided some of their first major innovations: to take their business off the street and instead conduct it in cars and by phone. The Xalisco dealers were tied together by complex social ties back home, which made it easy to set up a fairly reliable hierarchy: at the top was the business owner, who for the most part stayed put in Nayarit; beneath him was the cell manager, who ran the local business in the US, then there was the telephone operator and the drivers, both of whom received a weekly wage, as well as food, a home and expenses, which the manager would keep a close eye on. Then there were the drug mules, often women, who would bring up a steady supply of black tar from home.

The dealers placed put a heavy emphasis on smooth and friendly customer service (including special offers for regulars). When buying the heroin, addicts would be given a number to call, and a place and time to meet. At the meeting point, right on time, they would find a driver, who would spit out balloons, each filled with a tenth of a gram of heroin, according to their needs. Along with small stashes in other parts of the car, the drivers would have about twenty of these balloons in their mouth. If they got stopped by police, they could quickly and safely drink them down with some water. This, and the fact that they didn’t carry guns, never engaged in violence and drove around in unflashy cars and wore equally unflashy clothes, meant they rarely got caught. Even if they did, they never possessed enough to be given prison time. Rather, since the drivers were anyway often there illegally, if they were caught, they would be deported back to Mexico.

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The Franchise Goes Nationwide

By the late 1980s, the model which the first Xalisco migrants had brought to the San Fernando Valley had become a victim of its own success, enough other people from Xalisco had seen there was money to be made and so the market became saturated. At that point, instead of the usual descent into turf war that this saturation brings about (which would have been unthinkable given the close social ties) a few intrepid dealers began setting up new outposts beyond the comfort zone of their Xalisco immigrant community in San Fernando Valley.

Often, ostensibly rival dealers would exchange notes when they were back in Xalisco, slowly working out a shared code to maintain as they expanded to new markers. In the course of the next decade, they got as far as the Mississippi River and beyond, reaching numerous cities in the depressed and deprived post-industrial rust belt, where people had never before seen such potent heroin, yet were beginning to get hooked on emerging legal opioids supplied by pharmaceutical companies as prescription pain medication.

The Cost of Innovation

In his book, Quinones specifically compared the Xalisco drug dealers’ approach to a fast-food franchise, governed by principals of just-in-time supply. The hallmarks are clear to see: the small quantities of stock constantly on the move; the frequent changes in personnel; the tendency to share information with ostensible competitors; and the focus on smooth customer service.

Such innovation would be admirable if it weren’t for the immense human cost that came with it. This is what Quinones’ book is principally about, the opioid crisis in the US, a crisis which the Xalisco dealers had a major hand in exacerbating. Yet while the Xalisco dealers were refining their method, they were given a helping hand by the increasing commercial availability of prescription opiates like OxyContin. After decades of persuasion, America’s pharmaceutical industry had found a way to prescribe opium to ordinary patients, for a price, and in the frequent event that this price became too high to maintain a habit, the dealers were ever on hand to replace the patient’s addiction with an even more dangerous one. As a result, the rate of overdose deaths related to opiate overdose went from 3 per 100,000 in 2000 to 15 per 100,000 in 2017.